How you could solve the 40pc Inheritance Tax problem

Figures show that more people’s estates could potentially be taxed on death.

4:29PM BST 29 Jul 2013

With the existing Inheritance Tax thresholds frozen until at least 2018, you could store up a whole range of issues for your loved ones if you don’t take steps to address any potential liability.

That’s because 40p out of every £1 that your estate is worth, above your threshold, could be charged as Inheritance Tax. In addition, your loved ones may be forced to find the money to settle this bill before they can inherit what you want them to have – at a time when they would be least able to cope.

The thresholds stand at £325,000 if you are single or divorced and £650,000 if you are married (if you’re widowed, it is up to £650,000 depending on how much allowance was used when your partner passed away).

Your estate comprises your property, car, jewellery, savings and investments (plus any other items of notable value). When you total up your possessions you might be surprised by how much they are collectively worth.

MORE ESTATES ARE BECOMING LIABLE FOR INHERITANCE TAX

Inheritance Tax thresholds have remained at their current levels since April 2009 and, in February, it was confirmed they would remain frozen until at least 2018. This is having a considerable effect.

According to a Government paper published in June 2013, for the 2012/13 tax year, an estimated 21,000 estates would have been liable for Inheritance Tax if the estate holder had died. This is a rise of 4,000 estates from the 2010/11 tax year, suggesting an increasing number of people have climbed above their threshold. The Government projects to raise £3.3 billion from Inheritance Tax in 2013/14, compared to £2.9 billion in 2011/12.

So even if your estate’s value is currently below your threshold, future price rises – for example house prices – could push your estate’s value above it. These figures suggest even more people could be affected by Inheritance Tax in the future.

NO-OBLIGATION ADVICE COULD OFFER THE SOLUTION

You can give yourself – and loved ones – peace of mind by speaking to the Telegraph Inheritance Tax Service, provided by Skipton Financial Services Limited (SFS). As a first action, they can help you to establish whether you have – or in future may have – an Inheritance Tax liability. SFS can then provide advice on ways of addressing the problem, suited to your personal circumstances. There is no-obligation to act upon the advice offered.